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EXHIBIT 1.1
DRAFT DATED JULY 3, 1996
SOURCE SERVICES CORPORATION
COMMON STOCK
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UNDERWRITING AGREEMENT
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________________, 1996
THE ROBINSON-HUMPHREY COMPANY, INC.
RAUSCHER PIERCE REFSNES, INC.
As representatives of the several Underwriters named in Schedule I hereto
c/o The Robinson-Humphrey Company, Inc.
3333 Peachtree Road, N.E.
Atlanta, Georgia 30326
Dear Sirs:
Source Services Corporation, a Delaware corporation (the "Company"),
proposes, subject to the terms and conditions stated herein, to issue and sell
to the Underwriters named in Schedule I (the "Underwriters") an aggregate of
1,591,235 shares of common stock, par value $.02 per share ("Common Stock"), of
the Company (the "Company Firm Shares"), and the shareholders of the Company
named in Schedule II hereto (the "Selling Shareholders") propose, subject to
the terms and conditions stated herein, to sell to the Underwriters an
aggregate of 908,765 shares of Common Stock in the respective amounts set forth
opposite their names in Schedule II hereto (such shares together with the
Company Firm Shares, the "Firm Shares"), and at the election of the
Underwriters the Company proposes, subject to the terms and conditions stated
herein, to issue and sell to the Underwriters up to 375,000 additional shares
of Common Stock (the "Optional Shares") (the Firm Shares and the Optional
Shares that the Underwriters elect to purchase pursuant to Section 2 hereof are
collectively called the "Shares" ).
1. (a) REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to, and agrees with, each of the Underwriters that:
(i) A registration statement on Form S-1 (File No. 333-4691) with
respect to the Shares, including a prospectus subject to completion, has
been filed by the Company with the Securities and Exchange Commission
(the "Commission") under the Securities Act of 1933, as amended (the
"Act"), and one or more amendments to such registration statement have
been so filed. After the
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execution of this Agreement, the Company will file with the Commission
either (A) if such registration statement, as it may have been amended,
has become effective under the Act and information has been omitted
therefrom in accordance with Rule 430A under the Act, a prospectus in the
form most recently included in an amendment to such registration
statement with such changes or insertions as are required by Rule 430A or
permitted by Rule 424(b) under the Act and as have been provided to and
approved by the Representatives, or (B) if such registration statement,
as it may have been amended, has not become effective under the Act, an
amendment to such registration statement, including a form of prospectus,
a copy of which amendment has been provided to and approved by the
Representatives prior to the execution of this Agreement. As used in
this Agreement, the term "Registration Statement" means such registration
statement, as amended at the time when it was or is declared effective,
including all financial statement schedules and exhibits thereto and
including any information omitted therefrom pursuant to Rule 430A under
the Act and included in the Prospectus (as hereinafter defined); the term
"Preliminary Prospectus" means each prospectus subject to completion
included in such registration statement or any amendment or
post-effective amendment thereto (including the prospectus subject to
completion, if any, included in the Registration Statement at the time it
was or is declared effective); and the term "Prospectus" means the
prospectus first filed with the Commission pursuant to Rule 424(b) under
the Act or, if no prospectus is required to be so filed, such term means
the prospectus included in the Registration Statement. For purposes of
the following representations and warranties, to the extent reference is
made to the Prospectus and at the relevant time the Prospectus is not yet
in existence, such reference shall be deemed to be to the most recent
Preliminary Prospectus.
(ii) No order preventing or suspending the use of any Preliminary
Prospectus has been issued and, to the knowledge of the Company, no
proceeding for that purpose has been instituted or threatened by the
Commission or the securities authority of any state or other
jurisdiction. If the Registration Statement has become effective under
the Act, no stop order suspending the effectiveness of the Registration
Statement or any part thereof has been issued and, to the knowledge of
the Company, no proceeding for that purpose has been instituted or
threatened or is contemplated by the Commission or the securities
authority of any state or other jurisdiction.
(iii) When any Preliminary Prospectus was filed with the Commission
it (A) contained all statements required to be stated therein in
accordance with, and complied in all material respects with the
requirements of, the Act and the rules and regulations of the Commission
thereunder and (B) did not include any untrue statement of a material
fact or omit to state any material fact necessary in order to make the
statements therein, in the light of the
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circumstances under which they were made, not misleading. When the
Registration Statement or any amendment thereto was or is declared
effective, and at each Time of Delivery (as hereinafter defined), it (A)
contained or will contain all statements required to be stated therein in
accordance with, and complied or will comply in all material respects
with the requirements of, the Act and the rules and regulations of the
Commission thereunder and (B) did not or will not include any untrue
statement of a material fact or omit to state any material fact necessary
to make the statements therein not misleading. When the Prospectus or
any amendment or supplement thereto is filed with the Commission pursuant
to Rule 424(b) (or, if the Prospectus or such amendment or supplement is
not required to be so filed, when the Registration Statement or the
amendment thereto containing such amendment or supplement to the
Prospectus was or is declared effective) and at each Time of Delivery,
the Prospectus, as amended or supplemented at any such time, (A)
contained or will contain all statements required to be stated therein in
accordance with, and complied or will comply in all material respects
with the requirements of, the Act and the rules and regulations of the
Commission thereunder and (B) did not or will not include any untrue
statement of a material fact or omit to state any material fact necessary
in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. The foregoing
provisions of this paragraph (iii) do not apply to statements or
omissions made in any Preliminary Prospectus, the Registration Statement
or any amendment thereto or the Prospectus or any amendment or supplement
thereto in reliance upon and in conformity with written information
furnished to the Company by any Underwriter through you specifically for
use therein.
(iv) The Company has been duly incorporated, is validly existing as
a corporation in good standing under the laws of the State of Delaware
and has full power and authority (corporate and other) to own or lease
its properties and conduct its business as described in the Prospectus.
The Company has full power and authority (corporate and other) to enter
into this Agreement and to perform its obligations hereunder. The
Company is duly qualified to transact business as a foreign corporation
and is in good standing under the laws of each other jurisdiction in
which it owns or leases properties, or conducts any business, so as to
require such qualification, except where the failure to so qualify would
not have a material adverse effect on the financial position, results of
operations or business of the Company.
(v) The Company's authorized, issued and outstanding capital stock
is as disclosed in the Prospectus. All of the issued shares of capital
stock of the Company have been duly authorized and validly issued, are
fully paid and nonassessable and conform to the description of the Common
Stock contained in
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the Prospectus. None of the issued shares of capital stock of the
Company or its predecessors has been issued or is owned or held in
violation of any preemptive rights of shareholders, and no person or
entity (including any holder of outstanding shares of capital stock of
the Company) has any preemptive or other rights to subscribe for any of
the Shares.
(vi) The Company does not own, directly or indirectly, any capital
stock or other equity securities of any corporation or any ownership
interest in any partnership, joint venture or other association.
(vii) Except as disclosed in the Prospectus, there are no
outstanding (A) securities or obligations of the Company convertible into
or exchangeable for any capital stock of the Company, (B) warrants,
rights or options to subscribe for or purchase from the Company any such
capital stock or any such convertible or exchangeable securities or
obligations, or (C) obligations of the Company to issue any shares of
capital stock, any such convertible or exchangeable securities or
obligations, or any such warrants, rights or options.
(viii) Since the date of the most recent audited financial
statements included in the Prospectus, the Company has not sustained any
material loss or interference with its business from fire, explosion,
flood or other calamity, whether or not covered by insurance, or from any
labor dispute or court or governmental action, order or decree, otherwise
than as disclosed in or contemplated by the Prospectus.
(ix) Since the respective dates as of which information is given in
the Registration Statement and the Prospectus and other than as disclosed
in or contemplated by the Registration Statement and the Prospectus, (A)
the Company has not incurred any liabilities or obligations, direct or
contingent, or entered into any transactions, not in the ordinary course
of business, that are material to the Company, (B) the Company has not
purchased any of its outstanding capital stock or declared, paid or
otherwise made any dividend or distribution of any kind on its capital
stock, (C) there has not been any material change in the capital stock,
long-term debt or short-term debt of the Company, and (D) there has not
been any material adverse change, or any development that reasonably
could portend a prospective material adverse change, in or affecting the
financial position, results of operations or business of the Company.
(x) The Shares to be issued and sold by the Company have been duly
authorized and, when issued and delivered against payment therefor as
provided herein, will be validly issued and fully paid and nonassessable
and will conform to the description of the Common Stock contained in the
Prospectus; and
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the certificates evidencing the Shares will comply with all applicable
requirements of Delaware law.
(xi) Except as disclosed in the Prospectus, there are no contracts,
agreements or understandings between the Company and any person granting
such person the right to require the Company to file a registration
statement under the Act with respect to any securities of the Company
owned or to be owned by such person or to require the Company to include
such securities in the securities registered pursuant to the Registration
Statement (or any such right has been effectively waived) or in any
securities being registered pursuant to any other registration statement
filed by the Company under the Act.
(xii) All offers and sales of the Company's capital stock prior to
the date hereof were at all relevant times duly registered under the Act
or exempt from the registration requirements of the Act by reason of
Sections 3(b), 4(2) or 4(6) thereof and were duly registered or the
subject of an available exemption from the registration requirements of
the applicable state securities or blue sky laws, or if not registered or
exempt in compliance with the Act and applicable state securities or blue
sky laws, any private rights of action for rescission or damages arising
from such failure to register any such securities are time barred by
applicable statutes of limitations or equitable principles, including
laches.
(xiii) The Company is not, or with the giving of notice or passage
of time or both would not be, in violation of its Certificate of
Incorporation or Bylaws or in default under any indenture, mortgage, deed
of trust, loan agreement, lease or other agreement or instrument to which
the Company is a party or to which any of its properties or assets are
subject, except for any such default which would not have a material
adverse effect on the financial position, results of operations or
business of the Company.
(xiv) The issue and sale of the Shares to be issued and sold by the
Company and the performance of this Agreement and the consummation of the
transactions herein contemplated will not conflict with, or (with or
without the giving of notice or the passage of time or both) result in a
breach or violation of any of the terms or provisions of, or constitute a
default under, any material indenture, mortgage, deed of trust, loan
agreement, lease or other agreement or instrument to which the Company is
a party or to which any of its properties or assets is subject, except
for any such conflict, breach, violation or default which would not have
a material adverse effect on the financial position, results of
operations or business of the Company, nor will such action conflict with
or violate any provision of the Certificate of Incorporation or Bylaws of
the Company or any statute, rule or regulation or any order, judgment or
decree of any court or
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governmental agency or body having jurisdiction over the Company or any
of its properties or assets.
(xv) The Company has good and indefeasible title in fee simple to
all real property, if any, and good title to all personal property owned
by it, in each case free and clear of all liens, security interests,
pledges, charges, encumbrances, mortgages and defects, except such as are
disclosed in the Prospectus or such as do not materially and adversely
affect the value of such property and do not interfere with the use made
or proposed to be made of such property by the Company; and any real
property and buildings held under lease by the Company are held under
leases which are valid and enforceable as to the Company and, to the
Company's knowledge, as to others, with such exceptions as are disclosed
in the Prospectus or are not material and do not interfere with the use
made or proposed to be made of such property and buildings by the
Company.
(xvi) No consent, approval, authorization, order or declaration of
or from, or registration, qualification or filing with, any court or
governmental agency or body is required for the sale of the Shares or the
consummation of the transactions contemplated by this Agreement, except
the registration of the Shares under the Act (which, if the Registration
Statement is not effective as of the time of execution hereof, shall be
obtained as provided in this Agreement) and such as may be required from
the National Association of Securities Dealers, Inc. (the "NASD") and
under state securities or blue sky laws in connection with the offer,
sale and distribution of the Shares by the Underwriters.
(xvii) Other than as disclosed in the Prospectus, there is no
litigation, arbitration, claim, proceeding (formal or informal) or
investigation pending or, to the Company's knowledge, threatened (or any
basis therefor) in which the Company is a party or of which any of its
properties or assets are the subject which, if determined adversely to
the Company, would individually or in the aggregate reasonably be
expected to have a material adverse effect on the financial position,
results of operations or business of the Company. The Company is not in
violation of, or in default with respect to, any statute, rule,
regulation, order, judgment or decree, except as described in the
Prospectus or such as do not and will not individually or in the
aggregate have a material adverse effect on the financial position,
results of operations or business of the Company.
(xviii) To the Company's knowledge, Price Waterhouse LLP, who have
certified certain financial statements of the Company, are and were
during the periods covered by their reports included in the Registration
Statement and the Prospectus, independent public accountants as required
by the Act and the rules and regulations of the Commission thereunder.
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(xix) The financial statements and schedules (including the related
notes) of the Company included in the Registration Statement, the
Prospectus or any Preliminary Prospectus were prepared in accordance with
generally accepted accounting principles consistently applied throughout
the periods involved and fairly present the financial position and
results of operations of the Company, on a consolidated basis, at the
dates and for the periods presented. The selected financial data set
forth under the caption "Selected Financial Data" in the Prospectus
fairly present, on the basis stated in the Prospectus, the information
included therein.
(xx) This Agreement has been duly authorized, executed and delivered
by the Company and constitutes the valid and binding agreement of the
Company enforceable against the Company in accordance with its terms,
subject, as to enforcement, to applicable bankruptcy, insolvency,
reorganization and moratorium laws and other laws relating to or
affecting the enforcement of creditors' rights generally and to general
equitable principles.
(xxi) Neither the Company nor, to the Company's knowledge, any of
its officers, directors or other affiliates has (A) taken, directly or
indirectly, any action designed to cause or result in, or that has
constituted or might reasonably be expected to constitute, the
stabilization or manipulation of the price of any security of the Company
to facilitate the sale or resale of the Shares or (B) since the filing of
the Registration Statement (1) sold, bid for, purchased or paid anyone
any compensation for soliciting purchases of, the Shares or (2) paid or
agreed to pay to any person any compensation for soliciting another to
purchase any other securities of the Company.
(xxii) The Company has obtained for the benefit of the Company and
the Underwriters from each of its directors and executive officers a
written agreement that for a period of 180 days from the date of the
Prospectus such director or executive officer will not, without your
prior written consent, sell, offer to sell, contract to sell, solicit an
offer to buy, grant any option for the purchase or sale of, assign,
pledge, distribute or otherwise transfer, dispose of or encumber (or make
any announcement with respect to any of the foregoing), directly or
indirectly, any shares of Common Stock, or any options, rights, warrants
or other securities convertible into or exercisable or exchangeable for
Common Stock or evidencing any right to purchase or subscribe for shares
of Common Stock, whether or not beneficially owned by the undersigned,
except as provided in Section 2.
(xxiii) Neither the Company nor, to the Company's knowledge, any
director, officer, agent, employee or other person associated with or
acting on behalf of the Company has, directly or indirectly, used any
corporate funds for
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unlawful contributions, gifts, entertainment or other unlawful expenses
relating to political activity; made any unlawful payment to foreign or
domestic government officials or employees or to foreign or domestic
political parties or campaigns from corporate funds; violated any
provision of the Foreign Corrupt Practices Act of 1977, as amended; or
made any bribe, rebate, payoff, influence payment, kickback or other
unlawful payment.
(xxiv) The operations of the Company with respect to any real
property currently leased or owned or by any means controlled by the
Company (the "Real Property") are in compliance with all federal, state,
and local laws, ordinances, rules, and regulations relating to
occupational health and safety and the environment (collectively,
"Laws"), and the Company has all licenses, permits and authorizations
necessary to operate under all Laws and are in compliance with all terms
and conditions of such licenses, permits and authorizations, except for
any such non-compliance or any failure to have such necessary licenses,
permits and authorizations which would not have a material adverse effect
on the financial position, results of operations or business of the
Company; the Company has not authorized or conducted and has no knowledge
of the generation, transportation, storage, use, treatment, disposal or
release of any hazardous substance, hazardous waste, hazardous material,
hazardous constituent, toxic substance, pollutant, contaminant, petroleum
product, natural gas, liquefied gas or synthetic gas defined or regulated
under any environmental law on, in or under any Real Property; and there
is no pending or, to the Company's knowledge, threatened claim,
litigation or any administrative agency proceeding, nor has the Company
received any written or oral notice from any governmental entity or third
party, that: (A) alleges a violation of any Laws by the Company; (B)
alleges the Company is a liable party under the Comprehensive
Environmental Response, Compensation, and Liability Act, 42 U.S.C.
Section 9601 et seq. or any state superfund law; (C) alleges possible
contamination of the environment by the Company; or (D) alleges possible
contamination of the Real Property.
(xxv) The Company owns or has the right to use all patents, patent
applications, trademarks, trademark applications, tradenames, service
marks, copyrights, franchises, trade secrets, proprietary or other
confidential information and intangible properties and assets
(collectively, "Intangibles") necessary to its business as presently
conducted or as the Prospectus indicates the Company proposes to conduct;
to the knowledge of the Company, the Company has not infringed and is not
infringing, and the Company has not received notice of infringement with
respect to, asserted Intangibles of others; and, to the knowledge of the
Company, there is no infringement by others of Intangibles of the
Company.
(xxvi) The Company has previously disclosed and delivered or made
available to you prior to the date the Registration Statement was
declared
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effective copies of all pension, retirement, profit-sharing, deferred
compensation, stock option, employee stock ownership, severance pay,
vacation, bonus or other incentive plans, all other written employee
programs, arrangements or agreements, all medical, vision, dental or
other health plans, all life insurance plans and all other employee
benefit plans or fringe benefit plans, including, without limitation,
"employee benefit plans" as that term is defined in Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
adopted, maintained, sponsored in whole or in part or contributed to by
the Company or its predecessors for the benefit of employees, retirees,
dependents, spouses, directors, independent contractors or other
beneficiaries and under which employees, retirees, dependents, spouses,
directors, independent contractors or other beneficiaries are eligible to
participate (collectively, the "Company Benefit Plans").
The Company (and each predecessor of the Company that adopted or
contributed to a Company Benefit Plan) have maintained all Company
Benefit Plans (including filing all reports and returns required to be
filed with respect thereto) in accordance with their terms and in
compliance with the applicable terms of ERISA, the Internal Revenue Code
and any other applicable federal and state laws the breach or violation
of which would have, individually or in the aggregate, a material adverse
effect on the earnings, assets, affairs, business prospects or condition
(financial or otherwise) of the Company and its subsidiaries, taken as a
whole. Each Company Benefit Plan which is intended to be qualified under
Section 401(a) of the Internal Revenue Code has either received a
favorable determination letter from the Internal Revenue Service or
timely requested such a letter and has at all times been maintained in
accordance with Section 401 of the Internal Revenue Code, except where
any failure to so maintain such Company Benefit Plan would not have,
individually or in the aggregate, a material adverse effect on the
earnings, assets, affairs, business prospects or condition (financial or
otherwise) of the Company and its subsidiaries, taken as a whole. The
Company has not engaged in a transaction with respect to any Company
Benefit Plan that, assuming the taxable period of such transaction
expired as of the date hereof, would subject the Company or any
subsidiary to a tax or penalty imposed by either Section 4975 of the
Internal Revenue Code or Section 502(i) of ERISA in amounts which are
reasonably likely to have, individually or in the aggregate, a material
adverse effect on the earnings, assets, affairs, business prospects or
condition (financial or otherwise) of the Company and its subsidiaries,
taken as a whole.
The Company is not obligated to provide post-retirement medical
benefits or any other unfunded post-retirement welfare benefits (except
COBRA continuation coverage required to be provided by ERISA Section
601), which such liabilities to the Company would have, individually or
in the aggregate, a material adverse effect on the earnings, assets,
affairs, business prospects or
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condition (financial or otherwise) of the Company. Neither the Company
nor any member of a group of trades or businesses under common control
(as defined in ERISA Sections 4001(a)(14) and 4001(b)(1)) with the
Company have at any time within the last six years sponsored, contributed
to or been obligated under Title I or IV of ERISA to contribute to a
"defined benefit plan" (as defined in ERISA Section 3(35)). Within the
last six years, neither the Company nor any member of a group of trades
or businesses under common control (as defined in ERISA Sections
4001(a)(14) and 4001(b)(1)) with Company have had an "obligation to
contribute" (as defined in ERISA Section 4212) to a "multiemployer plan"
(as defined in ERISA Sections 4001(a)(3) and 3(37)(A)).
(xxvii) No labor dispute exists with the Company's employees or, to
the Company's knowledge, is imminent which could materially adversely
affect the condition (financial or otherwise), results of operations,
properties, affairs, management, business affairs or business prospects
of the Company. The Company is not aware of any existing or imminent
labor disturbance by its employees which could be expected to adversely
affect the condition (financial or otherwise), results of operations,
properties, affairs, management, business affairs or business prospects
of the Company.
(xxvii) No labor dispute exists with the Company's employees or is
imminent which could materially adversely affect the condition (financial
or otherwise), results of operations, properties, affairs, management,
business affairs or business prospects of the Company. The Company is
not aware of any existing or imminent labor disturbance by its employees
which could be expected to adversely affect the condition (financial or
otherwise), results of operations, properties, affairs, management,
business affairs or business prospects of the Company.
(xxviii) The Company is insured by insurers of recognized financial
responsibility against such losses and risks and in such amounts as are
customary in the businesses in which it is engaged; and the Company has
no knowledge of any facts or circumstances that would prevent the renewal
of its existing insurance coverage as and when such coverage expires or
that would prevent the Company from obtaining similar coverage from
similar insurers as may be necessary to continue its business at a
comparable cost, except as disclosed in the Prospectus.
(xxix) The Company makes and keeps accurate books and records
reflecting its assets and maintains internal accounting controls which
provide reasonable assurance that (A) transactions are executed in
accordance with management's authorization, (B) transactions are recorded
as necessary to permit preparation of the Company's consolidated
financial statements in accordance with
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generally accepted accounting principles and to maintain accountability
for the assets of the Company, (C) access to the assets of the Company is
permitted only in accordance with management's authorization, and (D) the
recorded accountability for assets of the Company is compared with
existing assets at reasonable intervals and appropriate action is taken
with respect to any differences.
(xxx) The Company's software systems include design, performance and
functionality so that the Company and its clients will not experience
invalid or incorrect results or abnormal software operation related to
calendar year 2000. The Company' software systems include calendar year
2000 date conversion and compatibility capabilities, including, but not
limited to, date data century recognition, same century and multiple
century formula and date value calculations, and user interface date data
values that reflect the century.
(xxxi) The Company has filed all foreign, federal, state and local
tax returns that are required to be filed by it and has paid all taxes
shown as due on such returns as well as all other taxes, assessments and
governmental charges that are due and payable, and no material deficiency
with respect to any such return has been assessed or proposed. All
applicable income and employment taxes have been withheld and paid for
any individuals who would be considered common law employees of the
Company for federal income and employment tax withholding purposes.
(xxxii) The Company is not, will not become as a result of the
transactions contemplated hereby, and does not intend to conduct its
business in a manner that would cause it to become, an "investment
company" or a company "controlled" by an "investment company" within the
meaning of the Investment Company Act of 1940, as amended.
(xxxiii) Neither the Company nor any "affiliate" (as defined in
Florida Statutes, Section 517.021(1), for purposes of this paragraph
only) does business with the government of Cuba or with any person or
affiliate located in Cuba that would require disclosure under Florida
Statutes, Section 517.075.
(b) REPRESENTATIONS AND WARRANTIES OF THE SELLING SHAREHOLDERS. Each
Selling Shareholder severally and not jointly represents and warrants to,
and agrees with, each of the several Underwriters and the Company that:
(i) Such Selling Shareholder has full right, power (corporate and
other) and authority to enter into this Agreement and the Custody
Agreement (as hereinafter defined) and to sell, assign, transfer and
deliver to the Underwriters the Shares to be sold by such Selling
Shareholder hereunder; and the execution and
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delivery of this Agreement and the Custody Agreement have been duly
authorized by all necessary action of such Selling Shareholder.
(ii) Such Selling Shareholder has duly executed and delivered this
Agreement and the Custody Agreement, and each constitutes the valid and
binding agreement of such Selling Shareholder enforceable against such
Selling Shareholder in accordance with its terms, subject, as to
enforcement, to applicable bankruptcy, insolvency, reorganization and
moratorium laws and other laws relating to or affecting the enforcement
of creditors' rights generally and to general equitable principles.
(iii) No consent, approval, authorization, order or declaration of
or from, or registration, qualification or filing with, any court or
governmental agency or body is required for the sale of the Shares to be
sold by such Selling Shareholder or the consummation of the transactions
contemplated by this Agreement or the Custody Agreement, except the
registration of such Shares under the Act (which, if the Registration
Statement is not effective as of the time of execution hereof, shall be
obtained as provided in this Agreement) and such as may be required from
the NASD and under state securities or blue sky laws in connection with
the offer, sale and distribution of such Shares by the Underwriters.
(iv) The sale of the Shares to be sold by such Selling Shareholder
and the performance of this Agreement and the Custody Agreement and the
consummation of the transactions herein and therein contemplated will not
conflict with, or (with or without the giving of notice or the passage of
time or both) result in a breach of violation of any of the terms or
provisions of, or constitute a default under, any indenture, mortgage,
deed of trust, loan agreement, lease or other agreement or instrument to
which such Selling Shareholder or any of its subsidiaries is a party or
to which any of their respective properties or assets is subject, nor
will such action conflict with or violate any provision of the
Certificate of Incorporation or Bylaws or other governing instruments of
such Selling Shareholder or any of its subsidiaries or any statute, rule
or regulation or any order, judgment or decree of any court or
governmental agency or body having jurisdiction over such Selling
Shareholder or subsidiary or any of such Selling Shareholder's or
subsidiary's properties or assets.
(v) Such Selling Shareholder has, and immediately prior to each Time
of Delivery (as defined in Section 4 hereof), such Selling Shareholder
will have, good and valid title to the Shares to be sold by such Selling
Shareholder hereunder, free and clear of all liens, security interests,
pledges, charges, encumbrances, defects, shareholders' agreements, voting
trusts, equities or claims of any nature whatsoever; and, upon delivery
of such Shares against payment therefor as provided herein, good and
valid title to such Shares, free and clear of
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all liens, security interests, pledges, charges, encumbrances, defects,
shareholders' agreements, voting trusts, equities or claims of any nature
whatsoever, will pass to the several Underwriters.
(vi) Neither such Selling Shareholder nor any of its officers,
directors or other affiliates has (A) taken, directly or indirectly, any
action designed to cause or result in, or that has constituted or might
reasonably be expected to constitute, the stabilization or manipulation
of the price of any security of the Company to facilitate the sale or
resale of the Shares or (B) since the filing of the Registration
Statement (1) sold, bid for, purchased or paid anyone any compensation
for soliciting purchases of, the Shares or (2) paid or agreed to pay to
any person any compensation for soliciting another to purchase any other
securities of the Company.
(vii) When any Preliminary Prospectus was filed with the Commission
it did not, with regard to such Selling Shareholder, include any untrue
statement of a material fact or omit to state any material fact necessary
in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. When the
Registration Statement or any amendment thereto was or is declared
effective and at each Time of Delivery, it did not or will not, with
regard to such Selling Shareholder, include any untrue statement of a
material fact or omit to state any material fact necessary to make the
statements therein not misleading. When the Prospectus or any amendment
or supplement thereto is filed with the Commission pursuant to Rule
424(b) (or, if the Prospectus or such amendment or supplement is not
required to be so filed, when the Registration Statement or the amendment
thereto containing such amendment or supplement to the Prospectus was or
is declared effective), and at each Time of Delivery, the Prospectus, as
amended or supplemented at any such time, did not or will not, with
regard to such Selling Shareholder, include any untrue statement of a
material fact or omit to state any material fact necessary in order to
make the statements therein, in the light of the circumstances under
which they were made, not misleading. The foregoing provisions of this
paragraph (vii) do not apply to statements or omissions made in any
Preliminary Prospectus, the Registration Statement or any amendment
thereto or the Prospectus or any amendment or supplement thereto in
reliance upon and in conformity with written information furnished to the
Company by any underwriter through you specifically for use therein.
Such Selling Shareholder further represents that it was not prompted to
sell the Shares to be sold by it hereunder by any information concerning
the Company that is not set forth in the Preliminary Prospectus or the
Prospectus.
In order to document the Underwriters' compliance with the reporting and
withholding provisions of the Internal Revenue Code of 1986, as amended, with
respect to the transactions herein contemplated, each of the Selling
Shareholders agrees to deliver to
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14
you prior to or at the First Time of Delivery (as hereinafter defined) a
properly completed and executed United States Treasury Department Form W-9 (or
other applicable form or statement specified by Treasury Department regulations
in lieu thereof).
Each of the Selling Shareholders represents and warrants that certificates
in negotiable form representing all of the Shares to be sold by such Selling
Shareholder hereunder have been placed in custody under a Custody Agreement and
Power of Attorney (the "Custody Agreement"), in the form heretofore furnished
to and approved by you, duly executed and delivered by such Selling Shareholder
to the Company, as custodian (the "Custodian"), which Custody Agreement
appoints D. Les Ward and Richard Dupont, and each of them, as such Selling
Shareholder's attorneys-in-fact (the "Attorneys-in-Fact") with authority to
execute and deliver this Agreement on behalf of such Selling Shareholder, to
determine the purchase price to be paid by the Underwriters to the Selling
Shareholders as provided in Section 2 hereof, to authorize the delivery of the
Shares to be sold by such Selling Shareholder hereunder and otherwise to act on
behalf of such Selling Shareholder in connection with the transactions
contemplated by this Agreement and the Custody Agreement.
Each of the Selling Shareholders specifically agrees that the Shares
represented by the certificates held in custody for such Selling Shareholder
under the Custody Agreement are subject to the interests of the Underwriters
hereunder, and that the arrangements made by such Selling Shareholder for such
custody, and the appointment by such Selling Shareholder of the
Attorneys-in-Fact, are irrevocable. Each of the Selling Shareholders
specifically agrees that the obligations of the Selling Shareholders hereunder
shall not be terminated by operation of law, whether by the death or incapacity
of any individual Selling Shareholder or, in the case of an estate or trust, by
the death or incapacity of any executor or trustee or the termination of such
estate or trust, or in the case of a partnership or corporation, by the
dissolution of such partnership or corporation, or by the occurrence of any
other event.
2. PURCHASE AND SALE OF SHARES. Subject to the terms and conditions
herein set forth, (a) the Company and each Selling Shareholder agree, severally
and not jointly, to sell to each of the Underwriters, and each of the
Underwriters agrees, severally and not jointly, to purchase from the Company
and each Selling Shareholder, at a purchase price of $________ per share, the
number of Firm Shares (to be adjusted by you so as to eliminate fractional
shares) determined by multiplying the aggregate number of Firm Shares to be
sold by the Company and by the Selling Shareholders as set forth opposite their
respective names in Schedule II hereto by a fraction, the numerator of which is
the aggregate number of Firm Shares to be purchased by such Underwriter as set
forth opposite the name of such Underwriter in Schedule I hereto, and the
denominator of which is the aggregate number of Firm Shares to be purchased by
the Underwriters from the Company and the Selling Shareholders hereunder and
(b) in the event and to the extent that the Underwriters shall exercise the
election to purchase Optional Shares as provided
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15
below, the Company agrees to issue and sell to each of the Underwriters, and
each of the Underwriters agrees, severally and not jointly, to purchase from
the Company, at the purchase price per share set forth in clause (a) of this
Section 2, that portion of the number of Optional Shares as to which such
election shall have been exercised (to be adjusted by you so as to eliminate
fractional shares) determined by multiplying such number of Optional Shares by
a fraction, the numerator of which is the maximum number of Optional Shares
that such Underwriter is entitled to purchase as set forth opposite the name of
such Underwriter in Schedule I hereto and the denominator of which is the
maximum number of the Optional Shares that all of the Underwriters are entitled
to purchase hereunder.
The Company hereby grants to the Underwriters the right to purchase, at
their election in whole or in part from time to time, up to 375,000 Optional
Shares, at the purchase price per share set forth in clause (a) in the
paragraph above, for the sole purpose of covering over-allotments in the sale
of Firm Shares. Any such election to purchase Optional Shares may be exercised
by written notice from you to the Company, given from time to time within a
period of 30 calendar days after the date of this Agreement and setting forth
the aggregate number of Optional Shares to be purchased and the date on which
such Optional Shares are to be delivered, as determined by you but in no event
earlier than the First Time of Delivery (as hereinafter defined) or, unless you
and the Company otherwise agree in writing, earlier than two or later than ten
business days after the date of such notice. In the event you elect to
purchase all or a portion of the Optional Shares, the Company agrees to furnish
or cause to be furnished to you the certificates, letters and opinions, and to
satisfy all conditions, set forth in Section 7 hereof at each Subsequent Time
of Delivery (as hereinafter defined).
3. OFFERING BY THE UNDERWRITERS. Upon the authorization by you of the
release of the Shares, the several Underwriters propose to offer the Shares for
sale upon the terms and conditions disclosed in the Prospectus.
4. DELIVERY OF SHARES; CLOSING. Certificates in definitive form for the
Shares to be purchased by each Underwriter hereunder, and in such denominations
and registered in such names as The Robinson-Humphrey Company, Inc. may request
upon at least 48 hours' prior notice to the Company, shall be delivered by or
on behalf of the Company and the Selling Shareholders to you for the account of
such Underwriter against payment by such Underwriter on its behalf of the
purchase price therefor by wire transfer or certified or official bank check or
checks drawn on an Atlanta, Georgia bank, payable to the order of the Company
and the Custodian, as their interests may appear, in same-day available funds.
The closing of the sale and purchase of the Shares shall be held at the offices
of Gardere & Wynne, 3000 Thanksgiving Tower, 1601 Elm Street, Dallas, Texas
75201, or at such other location as you, the Attorneys-in-Fact and the Company
may agree upon, except that physical delivery of such certificates shall be
made at the office of The Depository Trust Company, 55 Water Street, New York,
New York 10041. The time and date of such delivery and payment shall be, with
respect to the Firm Shares, at 9:00 a.m.,
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Dallas time, on the third (or if the Firm Shares are priced, as contemplated by
Rule 15c6-1(c) promulgated pursuant to the Securities Act of 1934, as amended
(the "Exchange Act"), after 4:30 p.m., Washington, D.C. time, the fourth) full
business day after this Agreement is executed or at such other time and date
not less than the seventh full business day thereafter as you and the Company
may agree upon in writing, and, with respect to the Optional Shares, at 10:00
a.m., Atlanta time, on the date and at the location specified by you in the
written notice given by you of the Underwriters' election to purchase all or
part of such Optional Shares, or at such other time and date as you and the
Company may agree upon. Such time and date for delivery of the Firm Shares is
herein called the "First Time of Delivery," such time and date for delivery of
any Optional Shares, if not the First Time of Delivery, is herein called a
"Subsequent Time of Delivery," and each such time and date for delivery is
herein called a "Time of Delivery." The Company will make such certificates
available for checking and packaging at least 24 hours prior to each Time of
Delivery at the office of the office of The Depository Trust Company, 55 Water
Street, New York, New York 10041 or at such other location in New York, New
York specified by you in writing at least 48 hours prior to such Time of
Delivery.
5. (A) COVENANTS OF THE COMPANY. The Company covenants and agrees with
each of the Underwriters:
(i) If the Registration Statement has been declared effective prior
to the execution and delivery of this Agreement, the Company will file
the Prospectus with the Commission pursuant to and in accordance with
subparagraph (1) (or, if applicable and if consented to by you,
subparagraph (4)) of Rule 424(b) not later than the earlier of (A) the
second business day following the execution and delivery of this
Agreement or (B) the fifth business day after the date on which the
Registration Statement is declared effective. The Company will advise
you promptly of any such filing pursuant to Rule 424(b).
(ii) The Company will not file with the Commission the prospectus or
the amendment referred to in the second sentence of Section l(a)(i)
hereof, any amendment or supplement to the Prospectus or any amendment to
the Registration Statement unless you have received a reasonable period
of time to review any such proposed amendment or supplement and consented
to the filing thereof and will use its best efforts to cause any such
amendment to the Registration Statement to be declared effective as
promptly as possible. Upon the request of the Representatives or counsel
for the Underwriters, the Company will promptly prepare and file with the
Commission, in accordance with the rules and regulations of the
Commission, any amendments to the Registration Statement or amendments or
supplements to the Prospectus that may be necessary or advisable in
connection with the distribution of the Shares by the several
Underwriters and will use its best efforts to cause any such amendment to
the Registration Statement to be declared effective as promptly as
possible. If required, the Company will file
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17
any amendment or supplement to the Prospectus with the Commission in the
manner and within the time period required by Rule 424(b) under the Act.
The Company will advise the Representatives, promptly after receiving
notice thereof, of the time when the Registration Statement or any
amendment thereto has been filed or declared effective or the Prospectus
or any amendment or supplement thereto has been filed and will provide
evidence to the Representatives of each such filing or effectiveness.
(iii) The Company will advise you promptly after receiving notice or
obtaining knowledge of (A) the issuance by the Commission of any stop
order suspending the effectiveness of the Registration Statement or any
part thereof or any order preventing or suspending the use of any
Preliminary Prospectus or the Prospectus or any amendment or supplement
thereto or of the initiation or threatening of any proceeding for any
such purpose, (B) the suspension of the qualification of the Shares for
offer or sale in any jurisdiction or of the initiation or threatening of
any proceeding for any such purpose, or (C) any request made by the
Commission or any securities authority of any other jurisdiction for
amending the Registration Statement, for amending or supplementing the
Prospectus or for additional information. The Company will use its best
efforts to prevent the issuance of any such stop order and, if any such
stop order is issued, to obtain the withdrawal thereof as promptly as
possible.
(iv) If the delivery of a prospectus relating to the Shares is
required under the Act at any time prior to the expiration of nine months
after the date of the Prospectus and if at such time any events have
occurred as a result of which the Prospectus as then amended or
supplemented would include an untrue statement of a material fact or omit
to state any material fact necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading, or if for any reason it is necessary during such same period
to amend or supplement the Prospectus to comply with the Act or the rules
and regulations thereunder, the Company will promptly notify you and upon
your request (but at the Company's expense) prepare and file with the
Commission an amendment or supplement to the Prospectus that corrects
such statement or omission or effects such compliance and will furnish
without charge to each Underwriter and to any dealer in securities as
many copies of such amended or supplemented Prospectus as you may from
time to time reasonably request. If the delivery of a prospectus
relating to the Shares is required under the Act at any time nine months
or more after the date of the Prospectus, upon your request but at the
expense of such Underwriter, the Company will prepare and deliver to such
Underwriter as many copies as you may request of an amended or
supplemented Prospectus complying with Section 10(a)(3) of the Act.
Neither your consent to, nor the Underwriters' delivery of, any such
amendment or supplement shall constitute a waiver of any of the
conditions set forth in Section 7.
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(v) The Company promptly from time to time will take such action as
you may reasonably request to qualify the Shares for offering and sale
under the securities or blue sky laws of such jurisdictions as you may
request and will continue such qualifications in effect for as long as
may be necessary to complete the distribution of the Shares, provided
that in connection therewith the Company shall not be required to qualify
as a foreign corporation or to file a general consent to service of
process in any jurisdiction.
(vi) The Company will promptly provide you, without charge, (A) two
manually executed copies of the Registration Statement as originally
filed with the Commission and of each amendment thereto, (B) for each
other Underwriter a conformed copy of the Registration Statement as
originally filed and of each amendment thereto, without exhibits, and (C)
so long as a prospectus relating to the Shares is required to be
delivered under the Act, as many copies of each Preliminary Prospectus or
the Prospectus or any amendment or supplement thereto as you may
reasonably request.
(vii) As soon as practicable, but in any event not later than 45
days after the end of the Company's fiscal quarter in which the first
anniversary of the effective date of the Registration Statement occurs,
the Company will make generally available to its security holders an
earnings statement of the Company and its subsidiaries, if any, covering
a period of at least 12 months beginning after the effective date of the
Registration Statement (which need not be audited) complying with Section
11(a) of the Act and the rules and regulations thereunder.
(viii) During the period beginning on the date hereof and continuing
to and including the date 180 days after the date of the Prospectus, the
Company will not, without your prior written consent, offer, pledge,
issue, sell, contract to sell, grant any option for the sale of, or
otherwise dispose of (or announce any of the foregoing, directly or
indirectly, any shares of Common Stock or securities convertible into,
exercisable or exchangeable for, shares of Common Stock, except as
provided in Section 2 and except that the Company may (aa) grant options
pursuant to the Company's stock option plans described in the
Registration Statement in the ordinary course of business consistent with
past practice; and (bb) issue shares of Common Stock upon the exercise of
any of the Company's outstanding stock options as described in the
Registration Statement or stock options granted under clause (aa) above.
(ix) During a period of five years from the effective date of the
Registration Statement, the Company will furnish to you and, upon
request, to each of the other Underwriters, without charge, (A) copies of
all reports or other communications (financial or other) furnished to
shareholders, (B) as soon as they
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19
are available, copies of any reports and financial statements furnished
to or filed with the Commission, the NASD or any national securities
exchange, and (C) such additional information concerning the business and
financial condition of the Company and its subsidiaries, if any, as you
may reasonably request.
(x) Neither the Company nor any of its officers, directors or other
affiliates will (A) take, directly or indirectly, prior to the
termination of the underwriting syndicate contemplated by this Agreement,
any action designed to cause or to result in, or that might reasonably be
expected to constitute, the stabilization or manipulation of the price of
any security of the Company to facilitate the sale or resale of any of
the Shares, (B) sell, bid for, purchase or pay anyone any compensation
for soliciting purchases of, the Shares or (C) pay or agree to pay to any
person any compensation for soliciting another to purchase any other
securities of the Company.
(xi) The Company will apply the net proceeds from the offering in
the manner set forth under "Use of Proceeds" in the Prospectus.
(xii) The Company will cause the Shares to be listed on the Nasdaq
Stock Market's National Market at each Time of Delivery and for at least
one year from the date hereof.
(xiii) If at any time during the period beginning on the date the
Registration Statement becomes effective and ending on the later of (A)
the date 30 days after such effective date and (B) the date that is the
earlier of (1) the date on which the Company first files with the
Commission a Quarterly Report on Form 10-Q or an Annual Report on Form
10-K after such effective date and (2) the date on which the Company
first issues a quarterly or annual financial report to shareholders after
such effective date, any rumor, publication or event relating to or
affecting the Company shall occur as a result of which in your reasonable
opinion the market price of the Common Stock has been or is likely to be
materially affected (regardless of whether such rumor, publication or
event necessitates an amendment of or supplement to the Prospectus), the
Company will, after written notice from you advising the Company to the
effect set forth above, forthwith prepare, consult with you concerning
the substance of, and disseminate a press release or other public
statement, reasonably satisfactory to you, responding to or commenting on
such rumor, publication or event.
(xiv) The Company will file timely and accurate reports on Form SR
with the Commission in accordance with Rule 463 of the Commission under
the Act or any successor provision or requirement.
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(B) COVENANTS OF THE SELLING SHAREHOLDERS. Each Selling Shareholder
covenants and agrees with each of the Underwriters:
(i) During the period beginning on the date hereof and continuing to
and including the date 180 days after the date of the Prospectus, such
Selling Shareholder will not, without your prior written consent, sell,
offer to sell, contract to sell, solicit an offer to buy, grant any
option for the purchase or sale of, assign, pledge, distribute or
otherwise transfer, dispose of or encumber (or make any announcement with
respect to any of the foregoing), directly or indirectly, any shares of
Common Stock, or any options, rights, warrants or other securities
convertible into or exercisable or exchangeable for Common Stock or
evidencing any right to purchase or subscribe for shares of Common Stock,
whether or not beneficially owned by the undersigned, except as provided
in Section 2.
(ii) Neither such Selling Shareholder nor any of its officers,
directors or other affiliates will (A) take, directly or indirectly,
prior to the termination of the underwriting syndicate contemplated by
this Agreement, any action designed to cause or to result in, or that
might reasonably be expected to constitute, the stabilization or
manipulation of the price of any security of the Company to facilitate
the sale or resale of any of the Shares, (B) sell, bid for, purchase or
pay anyone any compensation for soliciting purchases of, the Shares or
(C) pay to or agree to pay any person any compensation for soliciting
another to purchase any other securities of the Company.
6. EXPENSES. The Company will pay all costs and expenses incident to the
performance of its obligations and the obligations of the Selling Shareholders
under this Agreement, whether or not the transactions contemplated hereby are
consummated or this Agreement is terminated pursuant to Section 10 hereof,
including, without limitation, all costs and expenses incident to (i) the
reasonable fees, disbursements and expenses of the Company's counsel and
accountants in connection with the registration of the Shares under the Act and
all other expenses in connection with the preparation, printing and filing of
the Registration Statement (including all amendments thereto), any Preliminary
Prospectus, the Prospectus and, if applicable, any amendments and supplements
thereto, this Agreement and any blue sky memoranda; (ii) the delivery of copies
of the foregoing documents to the Underwriters; (iii) the filing fees of the
Commission and the NASD relating to the Shares and the related reasonable fees
and disbursements of counsel for the Underwriters in connection with filings
with the NASD; (iv) the preparation, issuance and delivery to the Underwriters
of any certificates evidencing the Shares, including transfer agent's and
registrar's fees; (v) the qualification of the Shares for offering and sale
under state securities and blue sky laws, including filing fees and reasonable
fees and disbursements of counsel for the Underwriters relating thereto; (vi)
any listing of the Shares on the Nasdaq Stock Market's National Market and
(vii) any reasonable expenses
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for travel, lodging and meals incurred by the Company and any of its officers,
directors and employees in connection with any meetings with prospective
investors in the Shares. In addition, each Selling Shareholder will pay all
costs and expenses incident to (i) the reasonable fees, disbursements and
expenses of counsel for such Selling Shareholder, (ii) such Selling
Shareholder's pro rata share of the fees and expenses of the Attorneys-in-Fact
and the Custodian, and (iii) the sale and delivery of the Shares to be sold by
such Selling Shareholder to the Underwriters hereunder. It is understood,
however, that, except as provided in this Section, Section 8 and Section 10
hereof, the Underwriters will pay all of their own costs and expenses,
including the fees of their counsel, stock transfer taxes on resale of any of
the Shares by them, and any advertising expenses relating to the offer and sale
of the Shares.
7. CONDITIONS OF THE UNDERWRITERS' OBLIGATIONS. The obligations of the
Underwriters hereunder to purchase and pay for the Shares to be delivered at
each Time of Delivery shall be subject, in their discretion, to the accuracy of
the representations and warranties of the Company and the Selling Shareholders
contained herein as of the date hereof and as of such Time of Delivery, to the
accuracy of the statements of Company officers made pursuant to the provisions
hereof, to the performance by the Company and the Selling Shareholders of their
respective covenants and agreements hereunder, and to the following additional
conditions precedent:
(a) If the registration statement as amended to date has not become
effective prior to the execution of this Agreement, such registration statement
shall have been declared effective not later than 4:00 p.m., Atlanta time, on
the day following the date of this Agreement or such later date and/or time as
shall have been consented to by you in writing. The Prospectus and any
amendment or supplement thereto shall have been filed with the Commission
pursuant to Rule 424(b) within the applicable time period prescribed for such
filing and in accordance with Section 5(a) of this Agreement; no stop order
suspending the effectiveness of the Registration Statement or any part thereof
shall have been issued and no proceedings for that purpose shall have been
instituted, threatened or, to the knowledge of the Company and the
Representatives, contemplated by the Commission; and all requests for
additional information on the part of the Commission shall have been complied
with to your reasonable satisfaction.
(b) Alston & Bird, counsel for the Underwriters, shall have furnished to
you such opinion or opinions, dated such Time of Delivery, with respect to the
incorporation of the Company, the validity of the Shares being delivered at
such Time of Delivery, the Registration Statement, the Prospectus, and other
related matters as you may reasonably request, and the Company shall have
furnished to such counsel such documents as they request for the purpose of
enabling them to pass upon such matters.
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(c) You shall have received an opinion, dated such Time of Delivery, of
Gardere & Wynne, L.L.P., counsel for the Company, in form and substance
satisfactory to you and your counsel, to the effect that:
(i) The Company has been duly incorporated, is validly existing as a
corporation in good standing under the laws of the State of Delaware and
has the corporate power and authority to own or lease its properties and
conduct its business as described in the Registration Statement and the
Prospectus and to enter into this Agreement and perform its obligations
hereunder. The Company is duly qualified to transact business as a
foreign corporation and is in good standing under the laws of each other
jurisdiction in which it owns or leases property, or conducts any
business, so as to require such qualification, except where the failure
to so qualify would not have a material adverse effect on the financial
position, results of operations or business of the Company.
(ii) The Company's authorized, issued and outstanding capital stock
is as disclosed in the Prospectus. All of the issued shares of capital
stock of the Company (including the Shares to be sold by the Selling
Shareholders) have been duly authorized and validly issued, are fully
paid and nonassessable and conform to the description of the Common Stock
contained in the Prospectus. None of the issued shares of capital stock
of the Company or its predecessors has been issued or is owned or held in
violation of any preemptive rights of shareholders, and no person or
entity (including any holder of outstanding shares of capital stock of
the Company) has any preemptive or other rights to subscribe for any of
the Shares.
(iii) Except as disclosed in the Prospectus, there are no
outstanding (A) securities or obligations of the Company convertible into
or exchangeable for any capital stock of the Company, (B) warrants,
rights or options to subscribe for or purchase from the Company any such
capital stock or any such convertible or exchangeable securities or
obligations, or (C) obligations of the Company to issue any shares of
capital stock, any such convertible or exchangeable securities or
obligations, or any such warrants, rights or options.
(iv) The Shares to be issued and sold by the Company have been duly
authorized and, when issued and delivered against payment therefor as
provided herein, will be validly issued and fully paid and nonassessable
and will conform to the description of the Common Stock contained in the
Prospectus; the certificates evidencing the Shares comply with all
applicable requirements of Delaware law; and the Shares have been listed
on the Nasdaq Stock Market's National Market.
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(v) Except as disclosed in the Prospectus, there are no contracts,
agreements or understandings between the Company and any person granting
such person the right to require the Company to file a registration
statement under the Act with respect to any securities of the Company
owned or to be owned by such person or to require the Company to include
such securities in the securities registered pursuant to the Registration
Statement (or any such right has been effectively waived) or in any
securities being registered pursuant to any other registration statement
filed by the Company under the Act.
(vi) All offers and sales of the Company's capital stock prior to
the date hereof were at all relevant times duly registered under the Act
or exempt from the registration requirements of the Act by reason of
Sections 3(b), 4(2) or 4(6) thereof and were duly registered or the
subject of an available exemption from the registration requirements of
the applicable state securities or blue sky laws, or if not registered or
exempt in compliance with the Act and applicable state securities or blue
sky laws, any private rights of action for rescission or damages arising
from such failure to register any such securities are time barred by
applicable statutes of limitations or equitable principles, including
laches.
(vii) The Company is not, or with the giving of notice or passage of
time or both, would not be, in violation of its Certificate of
Incorporation or Bylaws or in default under any indenture, mortgage, deed
of trust, loan agreement, lease or other agreement or instrument to which
the Company is a party or to which any of its properties or assets is
subject, except for any such default which would not have a material
adverse effect on the financial position, results of operations or
business of the Company.
(viii) The issue and sale of the Shares being issued at such Time of
Delivery and the performance of this Agreement and the consummation of
the transactions herein contemplated will not conflict with, or (with or
without the giving of notice or the passage of time or both) result in a
breach or violation of any of the terms or provisions of, or constitute a
default under, any material indenture, mortgage, deed of trust, loan
agreement, lease or other agreement or instrument to which the Company is
a party or to which any of its properties or assets is subject, except
for any such conflict, breach, violation or default which would not have
a material adverse effect on the financial position, results of
operations or business of the Company, nor will such action conflict with
or violate any provision of the Certificate of Incorporation or Bylaws of
the Company or any statute, rule or regulation or any order, judgment or
decree of any court or governmental agency or body having jurisdiction
over the Company or any of its respective properties or assets.
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(ix) The Company has good and indefeasible title in fee simple to
all real property and good title to all personal property owned by it, in
each case free and clear of all liens, security interests, pledges,
charges, encumbrances, mortgages and defects except such as are disclosed
in the Prospectus or such as do not materially and adversely affect the
value of such property and do not interfere with the use made and
proposed to be made of such property by the Company; and any real
property and buildings held under lease by the Company are held by the
Company under leases which are valid and enforceable as to the Company
and, to such counsel's knowledge, as to others, with such exceptions as
are disclosed in the Prospectus or are not material and do not interfere
with the use made and proposed to be made of such property and buildings
by the Company.
(x) No consent, approval, authorization, order or declaration of or
from, or registration, qualification or filing with, any court or
governmental agency or body is required for the issue and sale of the
Shares or the consummation of the transactions contemplated by this
Agreement, except the registration of the Shares under the Act and such
as may be required from the NASD or under state securities or blue sky
laws in connection with the offer, sale and distribution of the Shares by
the Underwriters.
(xi) To such counsel's knowledge and other than as disclosed in or
contemplated by the Prospectus, there is no litigation, arbitration,
claim, proceeding (formal or informal) or investigation pending or
threatened (or any basis therefor) in which the Company is a party or of
which any of its properties or assets is the subject which, if determined
adversely to the Company, would individually or in the aggregate
reasonably would be expected to have a material adverse effect on the
financial position, results of operations or business of the Company;
and, to such counsel's knowledge, the Company is not in violation of, or
in default with respect to, any statute, rule, regulation, order,
judgment or decree, except as described in the Prospectus.
(xii) The Company owns or has the right to use all Intangibles
necessary to its business as presently conducted or as the Prospectus
indicates the Company proposes to conduct; to such counsel's knowledge,
the Company has not infringed and is not infringing, and the Company has
not received notice of infringement with respect to, asserted Intangibles
of others; and, to such counsel's knowledge, there is no infringement by
others of Intangibles of the Company.
(xiii) This Agreement has been duly authorized, executed and
delivered by the Company and, assuming that this Agreement is governed by
the laws of the State of Texas, constitutes the valid and binding
agreement of the Company enforceable against the Company in accordance
with its terms, subject, as to enforcement, to applicable bankruptcy,
insolvency, reorganization and
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25
moratorium laws and other laws relating to or affecting the enforcement
of creditors' rights generally and to general equitable principles.
(xiv) The Registration Statement and the Prospectus and each
amendment or supplement thereto (other than the financial statements and
related schedules therein, as to which such counsel need express no
opinion), as of their respective effective or issue dates, complied as to
form in all material respects with the requirements of the Act and the
rules and regulations thereunder. The descriptions in the Registration
Statement and the Prospectus of statutes, legal and governmental
proceedings or contracts and other documents are accurate and fairly
present the information required to be shown; and such counsel do not
know of any statutes or legal or governmental proceedings required to be
described in the Registration Statement or Prospectus that are not
described as required or of any contracts or documents of a character
required to be described in the Registration Statement or Prospectus or
to be filed as exhibits to the Registration Statement which are not
described and filed as required.
(xv) The Registration Statement is effective under the Act; any
required filing of the Prospectus pursuant to Rule 424(b) has been made
in the manner and within the time period required by Rule 424(b); and no
stop order suspending the effectiveness of the Registration Statement or
any part thereof has been issued and, to such counsel's knowledge, no
proceedings for that purpose have been instituted or threatened or are
contemplated by the Commission.
(xvi) The Company is not, and will not be as a result of the
consummation of the transactions contemplated by this Agreement, an
"investment company," or a company "controlled" by an "investment
company," within the meaning of the Investment Company Act of 1940, as
amended.
(xviii) All individuals participating in (or eligible to participate
in) any Company Benefit Plan maintained (or contributed to) by the
Company are common-law employees under the rationale set forth in
Professional and Executive Leasing, Inc., 89 TC 225 (1987). No written
or oral representations have been made as to the impact of utilizing
Company employees (and other individuals compensated by Company for
services rendered to Company clients) on the tax qualified status under
Code Section 401 of the ERISA Plans of Company clients.
Such counsel shall also state that they have no reason to believe (i) that
the Registration Statement, or any further amendment thereto made prior to such
Time of Delivery, on its effective date and as of such time of Delivery,
contained or contains any untrue statement of a material fact or omitted or
omits to state any material fact required to be stated therein or necessary to
make the statements therein not misleading, or (ii) that the Prospectus, or any
amendment or supplement thereto made prior to such Time of
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26
Delivery, as of its issue date and as of such Time of Delivery, contained or
contains any untrue statement of a material fact or omitted or omits to state a
material fact necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading (provided that
such counsel need express no belief regarding the financial statements and
related schedules and other financial data contained in the Registration
Statement, any amendment thereto, or the Prospectus, or any amendment or
supplement thereto).
In rendering any such opinion, such counsel may rely, as to matters of
fact, to the extent such counsel deem proper, on certificates of responsible
officers of the Company and public officials.
(d) You shall have received an opinion, dated such Time of Delivery, of
Gardere & Wynne, L.L.P., counsel for the Selling Shareholders, in form and
substance satisfactory to you and your counsel, to the effect that:
(i) A Custody Agreement has been duly executed and delivered by each
Selling Shareholder, each of which Custody Agreement is enforceable
against such Selling Shareholder in accordance with its terms, subject,
as to enforcement, to applicable bankruptcy, insolvency, reorganization
and moratorium laws and other laws relating to or affecting the
enforcement of creditors' rights generally and to general equitable
principles.
(ii) This Agreement has been duly executed and delivered by or on
behalf of each Selling Shareholder.
(iii) As of such Time of Delivery, each Selling Shareholder has made
good delivery to the Underwriters, or to a financial intermediary
designated by you, of the Shares to be sold by such Selling Shareholder
hereunder, duly endorsed, and assuming that the Underwriters constitute
bona fide purchasers as defined in Section 8-302 of the Uniform
Commercial Code, the Selling Shareholders have transferred all rights and
interests therein to the Underwriters, free and clear of any and all
liens, pledges, encumbrances, charges, agreements, equities, claims,
security interests, restrictions, shareholder agreements or voting
trusts.
In rendering any such opinion, such counsel may rely, as to matters of
fact, to the extent such counsel deem proper, on certificates of responsible
officers of the Company, the Selling Shareholders and public officials.
(e) You shall have received from Price Waterhouse LLP letters dated,
respectively, the date hereof and each Time of Delivery, in form and
substance satisfactory to you, stating that they are independent public
accountants with
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27
respect to the Company within the meaning of the Act and the applicable
published rules and regulations of the Commission thereunder , and to the
effect that:
(i) In their opinion, the financial statements and schedules
audited by them and included in the Registration Statement comply
as to form in all material respects with the applicable accounting
requirements of the Act and the published rules and regulations
thereunder with respect to registration statements on Form S-1.
With respect to the three-month periods ended March 31, 1996 and
April 2, 1995, we have performed the procedures specified by the
American Institute of Certified Public Accountants for a review of
interim financial information as described in SAS No. 71, Interim
Financial Information, on the unaudited condensed consolidated
balance sheet as of March 31, 1996 and April 2, 1995 and the
unaudited consolidated condensed statements of income, of cash
flows and of changes in stockholders' equity for the three-month
periods ended March 31, 1996 and April 2, 1995 included in the
Registration Statement;
(ii) The unaudited summary and selected financial information
included in the Preliminary Prospectus and the Prospectus under
the captions "Prospectus Summary" and "Selected Financial Data"
agrees with the corresponding amounts in the audited financial
statements included in the Prospectus or previously reported on by
them;
(iii) On the basis of a reading of the latest available
interim financial statements (unaudited) of the Company, a reading
of the minute books of the Company, inquiries of officials of the
Company responsible for financial and accounting matters and other
specified procedures, all of which have been agreed to by the
Representatives, nothing came to their attention that caused them
to believe that:
(A) the unaudited financial statements described in
paragraph (i) above and included in the Registration
Statement do not comply as to form in all material respects
with the accounting requirements of the Act and the related
published rules and regulations thereunder or that any
material modifications should be made to such unaudited
financial statements for them to be in conformity with
generally accepted accounting principles;
(B) at a specified date not more than five days prior
to the date of delivery of such respective letter, there
was any change in the capital stock, decline in
stockholders' equity or increase in long-term debt of the
Company, or other items specified by the Underwriters, in
each case as compared with amounts shown in the
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28
latest balance sheets included in the Prospectus, except in
each case for changes, decreases or increases which the
Prospectus discloses have occurred or may occur or which
are described in such letters; and
(C) for the period from the closing date of the latest
statements of revenues and expenses included in the
Prospectus to a specified date not more than five days
prior to the date of delivery of such respective letter,
there were any decreases in net service revenue or net
income of the Company, or other items specified by the
Underwriters, or any increases in any items specified by
the Underwriters, in each case as compared with the
corresponding period of the preceding year, except in each
case for decreases which the Prospectus discloses have
occurred or may occur or which are described in such
letter.
(iv) They have carried out certain specified procedures, not
constituting an audit, with respect to certain amounts,
percentages and financial information specified by you which are
derived from the general accounting records of the Company, which
appear in the Prospectus and have compared and agreed such
amounts, percentages financial information with the accounting
records of the Company or to analyses and schedules prepared by
the Company from its detailed accounting records.
In the event that the letters to be delivered referred to above set
forth any such changes, decreases or increases, it shall be a further
condition to the obligations of the Underwriters that the Underwriters
shall have determined, after discussions with officers of the Company
responsible for financial and accounting matters and with Price
Waterhouse LLP, that such changes, decreases or increases as are set
forth in such letters do not reflect a material adverse change in the
stockholders' equity or long-term debt of the Company as compared with
the amounts shown in the latest balance sheets of the Company included in
the Prospectus, or a material adverse change in net service revenue or
net income, of the Company, in each case as compared with the
corresponding period of the prior year.
(f) Since the date of the latest audited financial statements included in
the Prospectus, the Company shall not have sustained (i) any loss or
interference with its business from fire, explosion, flood, hurricane or other
calamity, whether or not covered by insurance, or from any labor dispute or
court or governmental action, order or decree, otherwise than as disclosed in
or contemplated by the Prospectus, or (ii) any change, or any development
involving a prospective change (including without limitation a change in
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29
management or control of the Company), in or affecting the position (financial
or otherwise), results of operations, net worth or business prospects of the
Company, otherwise than as disclosed in or contemplated by the Prospectus, the
effect of which, in either such case, is in your judgment so material and
adverse as to make it impracticable or inadvisable to proceed with the
purchase, sale and delivery of the Shares being delivered at such Time of
Delivery as contemplated by the Registration Statement, as amended as of the
date hereof.
(g) The Shares shall be listed on the Nasdaq Stock Market's National
Market, subject to notice of issuance.
(h) Subsequent to the date hereof there shall not have occurred any of the
following: (i) any suspension or limitation in trading in securities generally
on the New York Stock Exchange, or any setting of minimum prices for trading on
such exchange, or in the Common Stock by the Commission or the NASD or the
Nasdaq Stock Market's National Market; (ii) a moratorium on commercial banking
activities in New York declared by either federal or state authorities; (iii)
any downgrading in the rating of any debt securities of the Company by any
"nationally recognized statistical rating organization" (as defined for
purposes of Rule 436(g) under the Act), or any public announcement that any
such organization has under surveillance or review its rating of any debt
securities of the Company (other than an announcement with positive
implications of a possible upgrading, and no implication of a possible
downgrading, of such rating); or (iv) any outbreak or escalation of hostilities
involving the United States, declaration by the United States of a national
emergency or war or any other national or international calamity or emergency
if the effect of any such event specified in this clause (iv) in your
reasonable judgment makes it impracticable or inadvisable to proceed with the
purchase, sale and delivery of the Shares being delivered at such Time of
Delivery as contemplated by the Registration Statement, as amended as of the
date hereof.
(i) The Company shall have furnished to you at such Time of Delivery
certificates of officers of the Company and certificates of the Selling
Shareholders, satisfactory to you, as to the accuracy of the representations
and warranties of the Company and such Selling Shareholders herein at and as of
such Time of Delivery, as to the performance by the Company and such Selling
Shareholders of all of their respective obligations hereunder to be performed
at or prior to such Time of Delivery and as to such other matters as you may
reasonably request, and the Company shall have furnished or caused to be
furnished certificates as to the matters get forth in subsections (a) and (f)
of this Section 7, and as to such other matters as you may reasonably request.
8. INDEMNIFICATION AND CONTRIBUTION. (a) The Company agrees to indemnify
and hold harmless each Underwriter against any losses, claims, damages or
liabilities, joint or several, to which such Underwriter may become subject,
under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out
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30
of or are based upon: (i) any untrue statement or alleged untrue statement made
by the Company in Section l(a) of this Agreement; (ii) any untrue statement or
alleged untrue statement of any material fact contained in (A) the Registration
Statement or any amendment thereto, any Preliminary Prospectus or the
Prospectus or any amendment or supplement thereto, or (B) any application or
other document, or any amendment or supplement thereto, executed by the Company
or based upon written information furnished by or on behalf of the Company
filed in any jurisdiction in order to qualify the Shares under the securities
or blue sky laws thereof or filed with the Commission or any securities
association or securities exchange (each an "Application"); (iii) the omission
or alleged omission to state in the Registration Statement or any amendment
thereto, any Preliminary Prospectus, the Prospectus or any amendment or
supplement thereto, or any Application a material fact required to be stated
therein or necessary to make the statements therein not misleading, or (iv) any
failure of the Company to perform its obligations hereunder or under law, and
will reimburse each Underwriter for any legal or other expenses reasonably
incurred by such Underwriter in connection with investigating, defending
against or appearing as a third-party witness in connection with any such loss,
claim, damage, liability or action; provided, however, that the Company shall
not be liable in any such case to the extent that any such loss, claim, damage,
liability or action arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission made in the
Registration Statement or any amendment thereto, any Preliminary Prospectus,
the Prospectus or any amendment or supplement thereto or any Application in
reliance upon and in conformity with written information furnished to the
Company by any Underwriter through you expressly for use therein (it being
understood that the only information so provided is the information included in
the last paragraph on the cover page and in the first seven paragraphs under
the caption "Underwriting" in any Preliminary Prospectus and the Prospectus).
The Company will not, without the prior written consent of each Underwriter,
settle or compromise or consent to the entry of any judgment in any pending or
threatened claim, action, suit or proceeding (or related cause of action or
portion thereof) in respect of which indemnification may be sought hereunder
(whether or not such Underwriter is a party to such claim, action, suit or
proceeding), unless such settlement, compromise or consent includes an
unconditional release of such Underwriter from all liability arising out of
such claim, action, suit or proceeding (or related cause of action or portion
thereof).
(b) Each Selling Shareholder severally and not jointly, agrees to
indemnify and hold harmless each Underwriter against any losses, claims,
damages or liabilities, joint or several, to which such Underwriter may become
subject, under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon: (i)
any untrue statement or alleged untrue statement made by any Selling
Shareholder in Section l(b) of this Agreement; (ii) with regard to such Selling
Shareholder, any untrue statement or alleged untrue statement of any material
fact contained in the Registration Statement or any amendment thereto, any
Preliminary Prospectus, the Prospectus or any amendment or supplement thereto,
the
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31
Custody Agreement or any Application; (iii) with regard to such Selling
Shareholder, the omission or alleged omission to state in the Registration
Statement or any amendment thereto, any Preliminary Prospectus, the Prospectus
or any amendment or supplement thereto, the Custody Agreement or any
Application a material fact required to be stated therein or necessary to make
the statements therein not misleading; or (iv) any failure of such Selling
Shareholder to perform his obligations hereunder, under the Custody Agreement
or under law, and will reimburse each Underwriter for any legal or other
expenses reasonably incurred by such Underwriter in connection with
investigating, defending against or appearing as a third-party witness in
connection with any such loss, claim, damage, liability or action; provided,
however, that no such Selling Shareholder shall be liable in any such case to
the extent that any such loss, claim, damage, liability or action arises out of
or is based upon an untrue statement or alleged untrue statement or omission or
alleged omission made in the Registration Statement or any amendment thereto,
any Preliminary Prospectus, the Prospectus or any amendment or supplement
thereto or any Application in reliance upon and in conformity with written
information furnished to the Company by any Underwriter through you expressly
for use therein (it being understood that the only information so provided is
the information included in the last paragraph on the cover page and in the
first seven paragraphs under the caption "Underwriting" in any Preliminary
Prospectus and the Prospectus); and provided further, however, that in no event
shall the liability of any Selling Shareholder under this Section 8(b) exceed
the net proceeds received by such Selling Shareholder from the Underwriters
with regard to the sale of Shares hereunder. No Selling Shareholder will,
without the prior written consent of each Underwriter, settle or compromise or
consent to the entry of any judgment in any pending or threatened claim,
action, suit or proceeding (or related cause of action or portion thereof) in
respect of which indemnification may be sought hereunder (whether or not such
Underwriter is a party to such claim, action, suit or proceeding), unless such
settlement, compromise or consent includes an unconditional release of such
Underwriter from all liability arising out of such claim, action, suit or
proceeding (or related cause of action or portion thereof).
(c) Each Underwriter, severally but not jointly, agrees to indemnify and
hold harmless the Company and each Selling Shareholder against any losses,
claims, damages or liabilities to which the Company or any Selling Shareholder
may become subject under the Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are
based upon any untrue statement or alleged untrue statement of any material
fact contained in the Registration Statement or any amendment thereto, any
Preliminary Prospectus, the Prospectus or any amendment or supplement thereto,
or any Application or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, in each case to the
extent, but only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission was made in reliance upon and in
conformity with written information furnished to the Company by such
Underwriter through you expressly for use therein (it being
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32
understood that the only information so provided is the information included in
the last paragraph on the cover page and in the first seven paragraphs under
the caption "Underwriting" in any Preliminary Prospectus and the Prospectus);
and will reimburse the Company and each Selling Shareholder for any legal or
other expenses reasonably incurred by the Company or such Selling Shareholder
in connection with investigating or defending any such loss, claim, damage,
liability or action.
(d) Promptly after receipt by an indemnified party under subsection (a),
(b) or (c) above of notice of the commencement of any action, such indemnified
party shall, if a claim in respect thereof is to be made against the
indemnifying party under such subsection, notify the indemnifying party in
writing of the commencement thereof; but the omission so to notify the
indemnifying party shall not relieve it from any liability which it may have to
any indemnified party otherwise than under such subsection. In case any such
action shall be brought against any indemnified party and it shall notify the
indemnifying party of the commencement thereof, the indemnifying party shall be
entitled to participate therein and, to the extent that it shall wish, jointly
with any other indemnifying party similarly notified, to assume the defense
thereof, with counsel satisfactory to such indemnified party (who shall not,
except with the consent of the indemnified party, be counsel to the
indemnifying party); provided, however, that if the defendants in any such
action include both the indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded that there may be one or more
legal defenses available to it or other indemnified parties which are different
from or additional to those available to the indemnifying party, the
indemnifying party shall not have the right to assume the defense of such
action on behalf of such indemnified party and such indemnified party shall
have the right to select separate counsel to defend such action on behalf of
such indemnified party. After such notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof and approval
by such indemnified party of counsel appointed to defend such action, the
indemnifying party will not be liable to such indemnified party under this
Section 8 for any legal or other expenses, other than reasonable costs of
investigation, subsequently incurred by such indemnified party in connection
with the defense thereof, unless (i) the indemnified party shall have employed
separate counsel in accordance with the proviso to the next preceding sentence
or (ii) the indemnifying party has authorized the employment of counsel for the
indemnified party at the expense of the indemnifying party. Nothing in this
Section 8(d) shall preclude an indemnified party from participating at its own
expense in the defense of any such action so assumed by the indemnifying party.
(e) If the indemnification provided for in this Section 8 is unavailable
to or insufficient to hold harmless an indemnified party under subsection (a),
(b) or (c) above in respect of any losses, claims, damages or liabilities (or
actions in respect thereof) referred to therein, then each indemnifying party
shall contribute to the amount paid or payable by such indemnified party as a
result of such losses, claims, damages or liabilities (or actions in respect
thereof) in such proportion as is appropriate to reflect the relative
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33
benefits received by the Company and the Selling Shareholders on the one hand
and the Underwriters on the other from the offering of the Shares. If,
however, the allocation provided by the immediately preceding sentence is not
permitted by applicable law or if the indemnified party failed to give the
notice required under subsection (d) above, then each indemnifying party shall
contribute to such amount paid or payable by such indemnified party in such
proportion as is appropriate to reflect not only such relative benefits but
also the relative fault of the Company and the Selling Shareholders on the one
hand and the Underwriters on the other in connection with the statements or
omissions that resulted in such losses, claims, damages or liabilities (or
actions in respect thereof), as well as any other relevant equitable
considerations. The relative benefits received by the Company and the Selling
Shareholders on the one hand and the Underwriters on the other shall be deemed
to be in the same proportion as the total net proceeds from the offering
(before deducting expenses) received by the Company and the Selling
Shareholders bear to the total underwriting discounts and commissions received
by the Underwriters. The relative fault shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company or the Selling Shareholders on
the one hand or the Underwriters on the other and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Company, the Selling Shareholders and the
Underwriters agree that it would not be just and equitable if contributions
pursuant to this subsection (e) were determined by pro rata allocation (even if
the Underwriters were treated as one entity for such purpose) or by any other
method of allocation which does not take account of the equitable
considerations referred to above in this subsection (e). The amount paid or
payable by an indemnified party as a result of the losses, claims, damages or
liabilities (or actions in respect thereof) referred to above in this
subsection (e) shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any such action or claim. Notwithstanding the provisions of this
subsection (e), no Underwriter shall be required to contribute any amount in
excess of the amount by which the total price at which the Shares underwritten
by it and distributed to the public were offered to the public exceeds the
amount of any damages which such Underwriter has otherwise been required to pay
by reason of such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. The Underwriters'
obligations in this subsection (e) to contribute are several in proportion to
their respective underwriting obligations and not joint.
(f) The obligations of the Company and the Selling Shareholders under this
Section 8 shall be in addition to any liability which the Company or such
Selling Shareholders may otherwise have and shall extend, upon the same terms
and conditions, to each person, if any, who controls any Underwriter within the
meaning of the Act; and the obligations of the Underwriters under this Section
8 shall be in addition to any liability
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34
which the respective Underwriters may otherwise have and shall extend, upon the
same terms and conditions, to each officer and director of the Company and each
Selling Shareholder and to each person, if any, who controls the Company and
such Selling Shareholder within the meaning of the Act.
9. DEFAULT OF UNDERWRITERS. (a) If any Underwriter defaults in its
obligation to purchase Shares at a Time of Delivery, you may in your discretion
arrange for you or another party or other parties to purchase such Shares on
the terms contained herein. If within thirty-six (36) hours after such default
by any Underwriter you do not arrange for the purchase of such Shares, the
Company and the Selling Shareholders shall be entitled to a further period of
thirty-six (36) hours within which to procure another party or other parties
satisfactory to you to purchase such Shares on such terms. In the event that,
within the respective prescribed periods, you notify the Company and the
Selling Shareholders that you have so arranged for the purchase of such Shares,
or the Company and the Selling Shareholders notify you that they have so
arranged for the purchase of such Shares, you or the Company and the Selling
Shareholders shall have the right to postpone a Time of Delivery for a period
of not more than seven days in order to effect whatever changes may thereby be
made necessary in the Registration Statement or the Prospectus, or in any other
documents or arrangements, and the Company agrees to file promptly any
amendments to the Registration Statement or the Prospectus that in your opinion
may thereby be made necessary. The cost of preparing, printing and filing any
such amendments shall be paid for by the Underwriters. The term "Underwriter"
as used in this Agreement shall include any person substituted under this
Section with like effect as if such person had originally been a party to this
Agreement with respect to such Shares.
(b) If, after giving effect to any arrangements for the purchase of the
Shares of a defaulting Underwriter or Underwriters by you and the Company and
the Selling Shareholders as provided in subsection (a) above, the aggregate
number of such Shares which remains unpurchased does not exceed one-eleventh of
the aggregate number of Shares to be purchased at such Time of Delivery, then
the Company and the Selling Shareholders shall have the right to require each
non-defaulting Underwriter to purchase the number of Shares which such
Underwriter agreed to purchase hereunder at such Time of Delivery and, in
addition, to require each non-defaulting Underwriter to purchase its pro rata
share (based on the number of Shares which such Underwriter agreed to purchase
hereunder) of the Shares of such defaulting Underwriter or Underwriters for
which such arrangements have not been made, but nothing herein shall relieve a
defaulting Underwriter from liability for its default.
10. TERMINATION. (a) This Agreement may be terminated with respect to the
Firm Shares or any Optional Shares in the sole discretion of the
Representatives by notice to the Company given prior to the First Time of
Delivery or any Subsequent Time of Delivery, respectively, in the event that
(i) any condition to the obligations of the Underwriters set forth in Section 7
hereof has not been satisfied in all material respects, or
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35
(ii) the Company or the Selling Shareholders shall have failed, refused or been
unable to deliver the Shares or to perform all obligations and satisfy all
conditions on their respective parts to be performed or satisfied hereunder at
or prior to such Time of Delivery, in either case other than by reason of a
default by any of the Underwriters. If this Agreement is terminated pursuant
to this Section 10(a), the Company and the Selling Shareholders, pro rata in
accordance with the number of Shares proposed to be sold hereunder, will
reimburse the Underwriters severally upon demand for all out-of-pocket expenses
(including reasonable counsel fees and disbursements) that shall have been
incurred by them in connection with the proposed purchase and sale of the
Shares. Neither the Company nor any Selling Shareholder shall in any event be
liable to any of the Underwriters for the loss of anticipated profits from the
transactions covered by this Agreement.
(b) If, after giving effect to any arrangements for the purchase of the
Shares of a defaulting Underwriter or Underwriters by you and the Company and
the Selling Shareholders as provided in Section 9(a), the aggregate number of
such Shares which remains unpurchased exceeds one-eleventh of the aggregate
number of Shares to be purchased at such Time of Delivery, or if the Company
and the Selling Shareholders shall not exercise the right described in Section
9(b) to require non-defaulting Underwriters to purchase Shares of a defaulting
Underwriter or Underwriters, then this Agreement (or, with respect to a
Subsequent Time of Delivery, the obligations of the Underwriters to purchase
and of the Company to sell the Optional Shares) shall thereupon terminate,
without liability on the part of any non-defaulting Underwriter, the Company or
the Selling Shareholders, except for the expenses to be borne by the Company,
the Selling Shareholders and the Underwriters as provided in Section 6 hereof
and the indemnity and contribution agreements in Section 8 hereof; but nothing
herein shall relieve a defaulting Underwriter from liability for its default.
11. SURVIVAL. The respective indemnities, agreements, representations,
warranties and other statements of the Company, its officers, the Selling
Shareholders and the several Underwriters, as set forth in this Agreement or
made by or on behalf of them, respectively, pursuant to this Agreement, shall
remain in full force and effect, regardless of any investigation (or any
statement as to the results thereof) made by or on behalf of any Underwriter or
any controlling person referred to in Section 8(e) or the Company, any Selling
Shareholder or any officer or director or controlling person of the Company or
any Selling Shareholder referred to in Section 8(e), and shall survive delivery
of and payment for the Shares. The respective agreements, covenants,
indemnities and other statements set forth in Sections 6 and 8 hereof shall
remain in full force and effect, regardless of any termination or cancellation
of this Agreement.
12. NOTICES. All communications hereunder shall be in writing and, if
sent to any of the Underwriters, shall be mailed, delivered or sent by
facsimile transmission and confirmed in writing to you in care of The
Robinson-Humphrey Company, Inc., 3333
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36
Peachtree Road, N.E., Atlanta, Georgia 30326, Attention: Corporate Finance
Department (with a copy to Alston & Bird, One Atlantic Center, 1201 West
Peachtree Street, Atlanta, Georgia 30309-3424, Attention: M. Hill Jeffries); if
sent to the Company, shall be mailed, delivered or sent by facsimile
transmission and confirmed in writing to the Company at Source Services
Corporation, 5580 LBJ Freeway, Suite 300, Dallas, Texas 75240, Attention:
President (with a copy to Gardere & Wynne, L.L.P., 3000 Thanksgiving Tower,
1601 Elm Street, Dallas, Texas 75201, Attention: Richard M. Hull); and if
sent to any Selling Shareholder, shall be mailed, delivered or sent by
facsimile transmission and confirmed in writing to the Attorneys-in-Fact, or
either of them, at Source Services Corporation, 5580 LBJ Freeway, Suite 300,
Dallas, Texas 75240 (with a copy to Gardere & Wynne, L.L.P., 3000 Thanksgiving
Tower, 1601 Elm Street, Dallas, Texas 75201, Attention: Richard M. Hull).
13. REPRESENTATIVES. You will act for the several Underwriters in
connection with the transactions contemplated by this Agreement, and any action
under this Agreement taken by you jointly or by The Robinson-Humphrey Company,
Inc. will be binding upon all the Underwriters.
14. BINDING EFFECT. This Agreement shall be binding upon, and inure
solely to the benefit of, the Underwriters, the Company and the Selling
Shareholders and to the extent provided in Sections 8 and 10 hereof, the
officers and directors and controlling persons referred to therein and their
respective heirs, executors, administrators, successors and assigns, and no
other person shall acquire or have any right under or by virtue of this
Agreement. No purchaser of any of the Shares from any Underwriter shall be
deemed a successor or assign by reason merely of such purchase.
15. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Georgia without giving effect to any
provisions regarding conflicts of laws.
16. COUNTERPARTS. This Agreement may be executed by any one or more of the
parties hereto in any number of counterparts, each of which shall be deemed to
be an original, but all such counterparts shall together constitute one and the
same instrument.
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37
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us one of the counterparts hereof, and
upon the acceptance hereof by The Robinson-Humphrey Company, Inc., on behalf of
each of the Underwriters, this letter will constitute a binding agreement among
the Underwriters and the Company. It is understood that your acceptance of
this letter on behalf of each of the Underwriters is pursuant to the authority
set forth in the Master Agreement among Underwriters, a copy of which shall be
submitted to the Company for examination upon request, but without warranty on
your part as to the authority of the signers thereof.
Very truly yours,
SOURCE SERVICES CORPORATION
By:
----------------------------
Name:
--------------------------
Title:
-------------------------
SELLING SHAREHOLDERS
By:
----------------------------
Name:
--------------------------
Attorney-in-Fact
The foregoing Agreement is hereby
confirmed and accepted as of the date
first written above at Atlanta,
Georgia.
THE ROBINSON-HUMPHREY COMPANY, INC.
RAUSCHER PIERCE REFSNES, INC.
By: The Robinson-Humphrey Company, Inc.
By:
-----------------------------------
(Authorized Representative)
On behalf of each of the Underwriters
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38
SCHEDULE I
Number of
Optional Shares
Total Number of to be Purchased
Firm Shares to be if Maximum
Underwriter Purchased Option Exercised
----------- ----------------- ----------------
[S] [C] [C]
The Robinson-Humphrey Company, Inc.
Rauscher Pierce Refsnes, Inc.
Total
---------- ----------
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39
SCHEDULE II
Total Number of Maximum Number
Firm Shares to be of Option Shares
Selling Shareholders* Sold to be Sold
----------------- ----------------
- --------------------
* Each of the Selling Shareholders has executed and delivered a Power of
Attorney appointing D. Les Ward and Richard Dupont such Selling Shareholder's
Attorneys-in-Fact and is represented by [insert name and address of counsel].
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